LEWISTON — Citing tough times brought on by money owed by the state and poor MaineCare reimbursement rates, Central Maine Healthcare is laying off 35 people.

In other efforts to save money, administrators, including CEO Peter Chalke, are taking an 8 percent salary cut. Another 16 managers will be demoted and 45 empty positions eliminated. Those and other long-term measures total about $11 million in savings, Central Maine Healthcare spokesman Chuck Gill said Tuesday.

“We believe at this point in time, that would be sufficient to balance our budget — again, that assumes that (patient) volumes come back, and volumes have been relatively slow,” he said.

Central Maine Healthcare says the state owes it $56 million in MaineCare payments going back to 2007.

Department of Health and Human Services Commissioner Brenda Harvey said in an interview late last week that Maine has been working to clear up that debt. According to Harvey, hospitals accepted federal stimulus funds toward back payment in 2008 and agreed then not to pursue layoffs for an undefined length of time.

“The whole purpose of Recovery Act dollars was to sustain employment or to make employment opportunities,” Harvey said. “(Gov. John Baldacci) came through with his agreement of $204 million of general funds, matched with federal money, for a total of $920 million paid to hospitals in his administration for settlements and now, here we are; the money’s gone out and they’re laying people off.”

A meeting is being set up next week with Baldacci, Chalke and others to talk about money owed to hospitals, the governor’s office confirmed Tuesday.

“Plan A is to have the money appropriated to pay the debt,” Gill said. “That would be the best. Beyond that, there could be a number of solutions.”

In July, the entire Central Maine Healthcare staff, about 3,200 people, learned they would not get raises and their vacation time would be reduced in an initial effort to cut costs, according to a press release. Gill said other efforts now include renegotiating vendor contracts, cutting back work hours and trimming benefits.

Central Maine Healthcare is the parent company of Central Maine Medical Center, Rumford Hospital and Bridgton Hospital.

Last week, officials said they believed most layoffs and other money-saving efforts would be centered at CMMC in Lewiston, the largest of the hospitals.

More patients not paying their bills, more MaineCare patients and the unpaid state reimbursements have led to the current situation, Gill said. He said the system is reimbursed 60 cents on the dollar for treating MaineCare patients. “The more care we provide, the more it costs us.”

Maine is estimated to pay Central Maine Healthcare $35 million for services this fiscal year, a DHHS spokesman said. Money hasn’t been budgeted for back payments.

“The fact that they have to make some business decisions and are using layoffs as a strategy, that’s for them to decide," Harvey said. "I think it’s unfortunate.”

kskelton@sunjournal.com